The Recovery of Durable Goods: What Exhilarated the Consumer?

Much of the strength in domestic demand during the first half of 1984 was in the consumption sector. This is not unusual for a recovery. Consumption spending typically rises rapidly in the first four quarters of a recovery and often continues to expand at a healthy pace as the economy moves into the second year of expansion. As shown in chart 1, the cyclical rise in total consumption spending during the first year and a half of the recovery was well within the range of previous postwar experience, rising a total of 8.7 percent. What was unusual, however, was the strength of demand for postponable, relatively durable consumer goods-especially spending for household equipment, such as furniture, kitchen appliances, and electronic goods, as well as outlays for clothing and shoes.